"I was reading the latest (overly?) optimistic forecast for global GDP growth from the OECD over next two years which confirms the continuation of the bull trend. That said I think they also forecasted continued growth just before the meltdown in 2008 so have to take this with a large bucket of salt (in their defense not many people predicted the meltdown either)

"As regards the two-year growth prediction some risks are outlined below:

1. Escalation of sovereign debt problems
2. Overheating in emerging markets
3. Members exiting too early from fiscal support and cutting government spending too quickly and aggressively
4. Monetary tightening
5. Combination of any or all of the above.

"Could you be so kind as to give your own views and additions to the list of macro risks to global growth going forward and consequently global stock markets. If I could also perhaps take the liberty to suggest some kind of definitive list and formal monitoring of these risks for the collective over time perhaps updated monthly?

"I for one would feel more comfortable investing/trading with a more formal but simple and systematic approach to monitoring and classifying those risks - it would complement very well the existing FM info, audios and debates. Over time this could be become an excellent investment tool just as the chart library is...Perhaps I am oversimplifying that this given my relative inexperience in financial markets and appreciate any feedback on that. (Although I consider my FM subscription as one of the best financial market educational options around) Thanks for an excellent service..."

Eoin Treacy's view Thank you for your kind words and this interesting question. I would be cautious in attempting to apply a 'one size fits all' approach to the global economy because the list of concerns above will apply to different countries in different ways. At Fullermoney we have tended to focus on three separate potential risks to global growth. There will obviously be others, not least peripheral Eurozone debt, but we believe sharply rising Treasury yields, a major decline in the US Dollar and surging commodity, particularly oil, prices pose the greatest risks to global growth. Right now these latter three issues are not at worrying levels.

The global economy can be described as two-tier with highly indebted, fiscally weak, poorly regulated countries with declining standards of economic, civil and corporate governance competing against creditor nations with sound fiscal policies, vigilant regulation, high growth and improving standards of economic, civil and corporate governance, albeit often from a low base. This divergence means that the concerns one might have about one block will not be relevant to the other. Deflation and sovereign risk are not concerns for much of Asia and Latin America. Inflation and monetary tightening are not currently concerns for investors focused on the USA, UK, Europe and Japan although some degree of policy normalisation is likely over the medium term.

If the Greek crisis has highlighted one fact above any other it is that in times of stress government fiscal policy will be dictated by the bond markets. Governments need funding and regardless of what politicians say, they have no choice but to acquiesce to the wishes of their lenders if they are to receive the capital they need. This means that numbers 1 and 3 above are deeply intertwined concerns for Europe, the UK, the USA and Japan. Slower growth than might otherwise have been expected is a distinct possibility as a result. However, provided governments are willing to tow the line on improving a country's fiscal standing, central banks will be under less pressure to raise interest rates provided inflation is not imported from elsewhere, particularly via higher commodity prices.

As we have said on a number of occasions previously, US Treasury yields above 4% would mark a yellow warning light for the stock market's medium-term uptrend. Above 5% would be a red warning light. (Also see David's Comment on April 10th).

Overheating has only been an issue for the Chinese property market and tightening measures are underway to contain this issue. These actions have weighed on the stock market. Elsewhere, interest rate hikes, where they have occurred, have been skewed toward policy normalisation rather than outright tightening since they are rising from a very low level. Since Asia and Latin America are leading the world in terms of GDP growth and often stock market performance, there is potential that their economies will overheat at some stage. Accommodative monetary conditions in much of the OECD largest economies will invariably help to fuel investment in the world's most attractive markets which are increasingly in Asia and Latin America. We believe that the potential for an investment mania to develop in emerging markets over the coming decade is high and our focus of attention has been on monitoring the markets we deem to be the best candidates to receive this kind of investor interest.

The US Dollar has surged over the last month against just about every currency as investors sought a safe haven from European debt concerns and sharply deteriorating markets. (Dollar Index, Asian Dollar Index, Latin America Dollar Index) It is now short-term overextended and some retracement of recent powerful gains is underway, particularly against higher growth currencies. Longer-term the Dollar Index hit a multi-year low in 2008 and posted a higher reaction low at the end of 2009. This would need to be taken out to give credence to a long-term bearish forecast.

Some might say that the US Dollar is the least of our worries because the Euro is about to disappear. There is no doubt that some mechanism will have to be worked out where a fiscally irresponsible country can be effectively sanctioned or ejected but the disappearance of the Euro is probably not imminent. The chart action suggests that this crisis is not yet over and a sovereign default or massive debt restructuring is a potential risk in Europe which would have damaging results for 'risk assets' should it occur. We will continue to monitor the chart action to determine just where the impact of such an event would be felt most acutely if it occurs.

The Euro has had a severe decline, taking it back to test the 2008 lows above $1.20 against the US Dollar, and it needs to sustain a move above $1.26 to question medium-term downtrend consistency. It is short-term oversold and beginning to lose downward momentum, particularly against the Australian Dollar and Canadian Dollar. There is room for a further relief rally but more substantive bullish action is needed before investor confidence begin to be restored.

Higher oil prices are a headwind for most forms of economic activity but fall most heavily on inefficient users of energy. Oil at $147 in 2008 was a contributory factor in the subsequent economic decline. Prices today are close to half that level. Oil prices rallied impressively from last week's intraday low near $65 and yesterday's upward dynamic see prices testing the 200-day moving average which is now declining. The break of the progression of rising reaction lows was a major inconsistency and while this week's rebound has checked the decline, oil will need to sustain a move back above $75 to indicate demand has regained the upper hand. Over the medium-term, oil does not look like it is about to accelerate to significant new recovery highs, in which case the threat it poses to global growth appears to be contained.

There is currently a plethora of things to worry about not least China's tightening, the Eurozone's debt problems, sovereign contagion, BP's oil spill, the threat of much tighter financial regulation, deflation in some countries, inflation in others, the potential threat of program trading, the lack of a US consumer led recovery and the approaching roll of a large batch ARM mortgages to name but a few. These concerns don't even begin to talk about the impact the April/May pullback has had on investor's portfolios and the damage done to sentiment. .

There are bullish signals. Inflation is unlikely to be a major problem for the USA, Europe, the UK and Japan. Monetary conditions will probably stay looser for longer. Oil is not currently offering a headwind. The majority of stock markets have found at least short-term support in the region of their 200-day moving averages or their February lows. Safe haven trades such as Treasuries, the US Dollar and the Yen are beginning to come under pressure. However, stock market investors are not out of the woods just yet. Technical damage has been done and the consistency of medium-term uptrends has deteriorated. This means that at the very least they will have to hold this week's lows and rally further, sustaining moves back above their 200-day moving averages if a further test of underlying trading is to be avoided.